bankruptcy

These are the most difficult times I have ever seen our country experience and no one is immune to the financial and economic insecurities that our nation is struggling through at this time. Every day it seems as though we only hear more bad news…layoff’s, mass murders, another politician being exposed for some sort of sexual impropriety, climate change and on and on it goes.

I would prefer to post something cheery and encouraging here, as we all need something to make us laugh a little and put a smile on our face. However, we are pretty powerless over the events that are unfolding each day and it simply comes down to ourselves and our families to make the most of where we find ourselves.

Some may find having those options more unlikely, especially if you happen to be a senior citizen. More bad news….I am going to re-post and article in two parts that discusses the latest findings regarding how many seniors find themselves very, very financially insecure.

Percentage of Economically Insecure Seniors Surges to 75% and Counting

July 26th, 2011 | by Elizabeth Ecker Published in Data, News, Reverse Mortgage

“Circumstances for retired seniors have gone from bad to worse, according to a July 2011 Research and Policy Brief, as household budgets are increasing while household assets drain away. The Institute on Assets and Social Policy (IASP) released a brief titled From Bad to Worse: Senior Economic Insecurity on the Rise, which examines the economic security of seniors and an increasingly common fear of outliving resources.

Declining household assets, inadequate household budgets, and increasing housing costs are the three main trends driving economic insecurity, says IASP. The number of households experiencing financial burden due to increased housing expenses rose to 50% in 2008, defined by the federal standard as 30% or more of a senior’s annual income going toward housing. And although many seniors have equity in their homes, says IASP, many of those homes require extensive—and expensive—maintenance, while other seniors are renters and don’t own their own properties.

Additionally, retirement assets are no longer as substantial as they once were, especially with the shift from defined-benefit plans to defined-contribution plans, and many senior households end up with a negative balance after taking care of necessary expenses.

Overall, economic insecurity among senior households experienced a notable rise from 27% to 36% between 2004 and 2008, the IASP found through using the Senior Financial Stability Index. And, says IASP, this began to happen even before the Great Recession, leaving the concern that seniors’ future prospects may get even worse.”

Of course this shouldn’t be any surprise due to the current and unrelenting financial crisis. But when it impacts a senior it seems to be just that much more devastating.

Here is a recent report on this very topic and I found it to be most interesting as the percentage of seniors filing for bankruptcy is quite high.

“A study released in the September issue of the ABI Journal found that Americans ages 55 and older are filing for bankruptcy at an increasing rate.
The study, “Aging and Bankruptcy Revisited,” was written by John Golmant and James Woods at the Administrative Office of the U.S. Courts to update a 2002 study that examined the degree to which bankruptcy filings are a function of age.

While the bulk of bankruptcies are filed by middle-aged Americans, the percentage of filers ages 55 and over grew 61 percent from 2002 to 2007, according to Golmant and Woods.

“This significant demographic uptick in older bankruptcy filers has outstripped the aging of the general population as a whole,” Golmant and Woods wrote.

The study found that the median age for bankruptcy filers increased to 44.9 years of age in 2007, from 37.7 years of age in 1994 and 41.4 years of age in 2002. The demographic that experienced the largest percentage drop in bankruptcy filings were Americans under 25 years old; they accounted for only 1.7 percent of filers in 2007, as compared to 4 percent in 2002 and 11 percent in 1994.

Golmant and Woods updated their study to determine whether the age trends examined in their previous study continued after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The authors analyzed samples of 2007 national bankruptcy filing data and compared it with data from 1994 and 2002.

“Baby Boomers” (born between 1946-1964) accounted for 42 percent of all filers in 2007. “The recent housing crisis has worsened the already precarious financial condition of many older Americans,” the study said. States that experienced decreases in the home price index had a 118 percent increase in bankruptcy filings, showing that the collapse of the housing bubble left many Baby Boomers with little or no home equity.

The study also found that one of the effects of BAPCPA has been an increase in the percentage of chapter 13 filings, but that it was difficult to gauge whether BAPCPA itself is causing the trend. “Another possibility is that, due to the mortgage crisis, more debtors were trying to postpone foreclosure on their homes by filing chapter 13,” according to the study.”

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